Europe’s top court said Tuesday that the Portuguese government was wrong to attempt to block the takeover of cement company Cimpor. The verdict represents a blow to governments who want to keep national control over private companies through "golden shares." The verdict also is a victory for European Union regulators, who say big mergers should be decided by Brussels, and not by member states. The case started in mid-summer 2000, when Holcim, along with Portuguese company Semapa, launched a hostile bid for Cimpor. The Portuguese government shot down this effort by using special voting rights in formerly state-owned Cimpor to veto the deal.
Portugal’s decision outraged the EU Commission, which has long campaigned against allowing governments to retain control of privatized companies and block dealmaking within Europe’s free-trade area. In November 2000 the Commission reversed Portugal, saying its veto couldn’t be justified on grounds of public security. Portugal, in turn, appealed. But on Tuesday, the European Court of Justice supported the Commission and called Portugal’s intervention "incompatible with Community law."
The cement deal never went through after the parties withdrew their application to merge in January 2001. Since the row, Portugal has scrapped its rules allowing for state intervention following a separate European court ruling in June 2002. Even so, EU spokeswoman Amelia Torres said Tuesday’s ruling is important because it "clarifies the Commission’s powers" to stop member states taking control of mergers that should be reviewed in Brussels. Torres underlined that governments have only limited grounds for taking control of merger reviews in cases where media plurality, public security and financial stability are at stake.